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Price determinants in top-quality e-auctioned specialty coffees

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  • M. Laura Donnet
  • Dave D. Weatherspoon
  • John P. Hoehn

Abstract

We analyze the price determinants of specialty coffees traded at e-auctions. We hypothesize that since specialty coffees are a highly differentiated product, prices will be determined by both sensory and reputation attributes. To test our hypotheses, we estimate a hedonic price function using data from Central and South American e-auctions and calculate the implicit prices of sensory and reputation attributes. The results show that market clearing prices are a function of sensory characteristics and reputation variables including third-party quality ranking, country of origin, coffee variety, and quantity. The additional attribute information disclosed at e-auctions results in substantially higher prices relative to conventional commodity coffee market prices. Copyright (c)2008 International Association of Agricultural Economists.

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Bibliographic Info

Article provided by International Association of Agricultural Economists in its journal Agricultural Economics.

Volume (Year): 38 (2008)
Issue (Month): 3 (05)
Pages: 267-276

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Handle: RePEc:bla:agecon:v:38:y:2008:i:3:p:267-276

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  1. Oczkowski, Edward A., 1994. "A Hedonic Price Function For Australian Premium Table Wine," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, Australian Agricultural and Resource Economics Society, vol. 38(01), April.
  2. Halvorsen, Robert & Pollakowski, Henry O., 1981. "Choice of functional form for hedonic price equations," Journal of Urban Economics, Elsevier, vol. 10(1), pages 37-49, July.
  3. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 74, pages 132.
  4. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, Elsevier, vol. 27(2), pages 253-279, August.
  5. Landon, Stuart & Smith, Constance, 1997. "The Use of Quality and Reputation Indicators by Consumers: The Case of Bordeaux Wine," MPRA Paper 9283, University Library of Munich, Germany.
  6. Shapiro, Carl, 1983. "Premiums for High Quality Products as Returns to Reputations," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 98(4), pages 659-79, November.
  7. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  8. G¸nter Schamel & Kym Anderson, 2003. "Wine Quality and Varietal, Regional and Winery Reputations: Hedonic Prices for Australia and New Zealand," The Economic Record, The Economic Society of Australia, The Economic Society of Australia, vol. 79(246), pages 357-369, 09.
  9. Combris, Pierre & Lecocq, Sebastien & Visser, Michael, 1997. "Estimation for a Hedonic Price Equation for Bordeaux Wine: Does Quality Matter?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 107(441), pages 390-402, March.
  10. Rosen, Sherwin, 1981. "The Economics of Superstars," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 845-58, December.
  11. Nelson, Phillip, 1970. "Information and Consumer Behavior," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 78(2), pages 311-29, March-Apr.
  12. Pierre Combris & Sebastien Lecocq & Michael Visser, 2000. "Estimation of a hedonic price equation for Burgundy wine," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 32(8), pages 961-967.
  13. Miguel Carriquiry & Bruce A. Babcock, 2004. "Reputation, Quality Observability, and the Choice of Quality Assurance Systems," Center for Agricultural and Rural Development (CARD) Publications 04-wp373, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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Cited by:
  1. Teuber, Ramona & Herrmann, Roland, 2012. "Towards a differentiated modeling of origin effects in hedonic analysis: An application to auction prices of specialty coffee," Food Policy, Elsevier, Elsevier, vol. 37(6), pages 732-740.
  2. Zhang, Huifang & Gallardo, Rosa Karina & McCluskey, Jill J. & Kupferman, Eugene M., 2010. "Consumers' Willingness to Pay for Treatment-Induced Quality Attributes in Anjou Pears," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, Western Agricultural Economics Association, vol. 35(1), April.
  3. Donnet, M. Laura & Weatherspoon, Dave D. & Hoehn, John P., 2007. "What Adds Value in Specialty Coffee? Managerial Implications from Hedonic Price Analysis of Central and South American E-Auctions," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), International Food and Agribusiness Management Association (IAMA), vol. 10(03).
  4. Wilson, Adam P. & Wilson, Norbert L., 2013. "The Economics of Quality in the Specialty Coffee Industry: Insights from the Cup of Excellence Auction Programs," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C., Agricultural and Applied Economics Association 150721, Agricultural and Applied Economics Association.
  5. Satimanon, Thasanee & Weatherspoon, Dave D., 2010. "Hedonic Analysis of Sustainable Food Products," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association (IAMA), International Food and Agribusiness Management Association (IAMA), vol. 13(4).
  6. Herrmann, Roland & Marauhn, Thilo & Teuber, Ramona, 2008. "Der Schutz geographischer Herkunftsangaben: Herausforderungen für agrarökonomische, rechtswissenschaftliche und interdisziplinäre Forschung," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 57(7).
  7. Teuber, Ramona, 2010. "Estimating the Demand for Sensory Quality – Theoretical Considerations and an Empirical Application to Specialty Coffee," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 59(3).
  8. Teuber, Ramona, 2008. "Geographical Indications and the Value of Reputation - Empirical Evidence for Cafe de Marcala," 2008 International Congress, August 26-29, 2008, Ghent, Belgium, European Association of Agricultural Economists 43835, European Association of Agricultural Economists.

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